Business Tax Update │November 2017
A look at the Tax News that may affect businesses this month.
- Government cracks down on illegal phoenixing
- Reduction of wine equalisation tax (WET) rebate cap
- Other legislation that may impact on you or your business
Government cracks down on illegal phoenixing
The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, announced on 12 September 2017 that the Government is taking action to crack down on illegal phoenixing activity to ensure those involved face tougher penalties.
Illegal phoenixing involves transferring assets from an indebted company to a new company, in order to avoid paying creditors, tax or employee entitlement.
The Government’s package of reforms will include the introduction of a Director Identification Number (DIN) and a range of other measures to both deter and penalise phoenix activity.
The DIN will identify directors with a unique number. The DIN will interface with other government agencies and databases to allow regulators to map the relationships between individuals and entities and individuals and other people.
In addition to the DIN, the Government will consult on implementing a range of other measures to deter and disrupt the core behaviours of phoenix operators, including non-directors such as facilitators and advisers.
The Government will consult on how best to identify high risk individuals who will be subject to new preventative and early intervention tools, including:
- a next-cab-off-the-rank system for appointing liquidators;
- allowing the ATO to retain tax refunds; and
- allowing the ATO to commence immediate recovery action following the issuance of a Director Penalty Notice.
The Government put out a discussion paper in October containing numerous ideas for how to combat phoenixing behaviours.
Reduction of wine equalisation tax (WET) rebate cap
In the 2016-17 Budget, the Government announced that it will address integrity concerns with the wine equalisation tax (WET) rebate by reducing the WET rebate cap and tightening eligibility criteria.
The scheduled changes include:
- strengthening the associated producer provisions, so that from 1 October 2017 the associated producer test applies at any time during the financial year;
- reducing the WET rebate cap from $500,000 to $350,000 on 1 July 2018;
- introducing tightened eligibility criteria for the producer rebate from 1 July 2018 with some transitional arrangements from 1 January 2018; and
- creating a stronger link between rebate claims and the payment of WET by limiting entitlements to WET credits and changes to the quoting rules from 1 July 2018.
The changes were passed into legislation in August 2017.
Other legislation that may impact on you or your business
The Bill extends the crowd-sourced funding (CSF) regime to proprietary companies, making a new funding source available for small businesses, while maintaining adequate investor protections through additional obligations on companies. The measure extends upon the Corporations Amendment (Crowd-sourced Funding) Act 2017 to enable proprietary companies to access CSF without transitioning to public company status.
Choice of fund for workplace determinations and enterprise agreements
- The Bill amends the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGAA) to ensure employees under workplace determinations or enterprise agreements have an opportunity to choose the superannuation fund for their compulsory employer contributions.
Salary sacrifice integrity
- The Bill also amends the SGAA to improve the integrity of the superannuation system by ensuring that an individual’s salary sacrifice contributions cannot be used to reduce an employer’s minimum superannuation guarantee (SG) contributions.
Further to the Treasury Laws Amendment (Enterprise Tax Plan) Act 2017, this Bill amends the Rates Act to:
- progressively extend the lower 27.5% corporate tax rate to all corporate tax entities by the 2023-24 financial year; and
- further reduce the corporate tax rate in stages so that by the 2026-27 financial year, the corporate tax rate for all entities will be 25%.